Simon Says: Your right of refusal as a sitting tenant
This is the tenth in a weekly series of legal advice provided in a short and entertaining story format.
This week's areas of Interest: Landlord Tenant Disputes
This week's keywords: Contract, Tenancy, Right of a Tenant, Right of First Refusal
Your right of refusal as a sitting tenant
Jack is an owner of a fashion boutique in Pudong, Shanghai, selling his own signature brand hi fashion. As business has been going well, he understands a warehouse at convenient location is necessary, and he decides instead of renting the warehouse, to buy it.
The tenancy agreement was about to end in a month, so he called the landlord, Jill and told her he wanted to buy it. However, Jill told him that she was going to sell the warehouse for two million to Bob instead and the completion shall be soon after the tenancy expires.
Jack: I can also pay two million for the warehouse. Why don’t you ask me before offering it to Bob?
Jill: Sorry Jack… but Bob can pay two million in cash and I need some cash flow for my own business, so I am selling it to him.
Jack: Oh Jill, I am the tenant. Should I be the first one to buy if you offer to sell? I can buy at the same terms or it causes me lots of troubles as a lot of inventory in the warehouse, so I am unable to move out right now.
Jill: Jack, I simply don’t care. Please empty and move out the warehouse when the lease expires.
What can Jack do on this?
Prof Simon Says:
Jill must have to give reasonable prior notice to Jack if she decides to sell the property. Jill can’t sell to Bob unless Jack decides not to buy. Jack has the right of first refusal under the Contract Law of China.
For more about this or to contact Professor Simon Choi at www.acmeardent.com, email@example.com, +86 13823677853 or by WeChat: simonhkchoi.
"This article was originally written in Chinese by Mr Huanyu Li and rewritten into English by Simon Choi."
About the Author: Professor Simon Choi
Prof Simon Choi, solicitor and linguist, is an international lawyer, qualified to practise law in England & Wales and in Hong Kong, China. Simon graduated from law schools of the Peking University, the University of London and the University of Hong Kong respectively, with an in-depth knowledge of Chinese laws and common laws and with more than 20 years experience in China practice and international trade, investment, finance, merger & acquisition. He is an adjunct professor of laws at the Zhongnan University of Economics and Law. Simon is the founding partner of Acme Ardent and can be reached at firstname.lastname@example.org or +86 13823677853.